From Deliverance Smith's pension application:
Image From Footnote.com (Page 4 of Deliverance Smith Rev. War. Pension Application)
...One circumstance he wishes to mention which took place about that time and that is this is this (sic); that a person whose name this Declarer does not now recollect but who was an adherent to the British and who, while they were taking him before the proper American Officer, was discovered in the act of swallowing something hastily and on medicine being forcibly administered to him, he brought up a silver ball; curiously put together in the shape and size of an ounce lead ball, which silver ball, on being opened, was found to contain, (as was afterward proved), intelligence from Burgoyne's Army to the British General, Sir Henry Clinton, then at New York _____whereupon, the Tory spy, so taken, was immediately brought to trial before a court martial, found guilty and hanged....
From History Of The Settlement Of Upper Canada...
According to this article, the spy was hung from an apple tree in Hurley, New York. The article also stated that the silver ball is on display at Fort Ticonderoga. The "Papers of Captain Rufus Lincoln" contains a corroborating account of the silver ball spy incident. In 1902 the ball was displayed in Independence Hall in Philadelphia.
The story of Daniel Taylor, the spy, as portrayed in the "Public Papers of George Clinton." The Clements Library at the University of Michigan has a site about "Spy Letters of the American Revolution," including the letter found on Daniel Taylor.
Additional details of the incident can be found in "The Pictorial Field-Book Of The Revolution..." by Lossing.